Wednesday, 30 January 2013

Europe's MVNOs still singing 7 years on...

Six years on from the original article, and 13 years on from the first European MVNO in the UK, the European market is still singing, fortunately!

MVNO market share Europe

Why is this? Well partly as written in my Future MVNO article of a couple of weeks back; Europe is on the higher side of the highest MVNO % of MVNO market share, and that's a big deal. So if one MVNO in one country can represent as much as all the MVNOs in other countries, there is still a long way to go, and every indication that wholesale can represent much higher market share in mobile as it does in other markets.

W. Europe is at the higher end of high MVNO market share

While Europe and the US are far ahead of the rest of the world, Europe is far ahead of that, with the UK at 14% MVNO market share, and countries such as Denmark, with Telmore MVNO at 800,000 customers in Denmark... and only 3 people live in Denmark! (I lie, its actually 5.5M...) which makes high double digit MVNO market share for just its biggest MVNO!

Why European MVNOs sing

So what contributes to the European MVNO flurry? Well, in order:

GSM MVNO

The GSM network gives Europe a strong advantage, whereas the first MVNOs in the US were using CDMA, CDMAs have lower yield and lower margin and the switch of a handset is a churn catalyst in CDMA, whereas in GSM MVNOs changing handsets is just a churn opportunity

MVNOs and handset

The buoyant handset market has contributed heavily, in countries like the UK sponsored by MNOs, in countries like Italy funded entirely by the user, and in the UK the iPhone phenomenon saw premium rates. When the iPhone launched in the US it was yours unlimited for $22 per month, in Europe the compulsory extra unlimited data bundle for iPhones was not far from that alone!

MNO MVNO dynamic

The MNOs paid quite a lot for 3G licences, and needed to amortise this investment - wholesale has become the MNO cash cow in Europe, and the above factors allow this to be quite a milk machine!

European MVNO market

The European MVNO market is diverse: despite the "common market" coming in to place an embarrassing amount of time ago, Europe is very, very far from a "common market" - Roaming is still a chore, and 9% of Europeans live in another member state, yes 9%: the niche is the MVNOs friend and Europe is full of niche markets

Original why Europe's MVNOs still sing Article (2007)

RE: Why Europe's Mobile Start-ups Sing

Different markets require different business and marketing models

I was sent an article from Business Week with the above title via email by a client; one of those nice comforting articles that make you feel you have made the right choice by doing many of the things that are in the article as they preach is right, with the added smugness of feeling you are doing something a little extra they have not twigged yet!

They are right in that one MVNO model is the low cost route, however there are more important keys I have seen, from behind the scenes, that have made or broke MVNOs in Europe:

One is a good network deal: Never underestimate the value of good advice before embarking upon something as hard to chew as an MVNO. There is no point keeping other costs low, if your single most important cost base is inflexible. These situations remind me of heavy industries with inflexible human resource, only instead of being an inevitable legacy issue, it is more a best avoided product of "staff from legacy networks" issue, which brings me to the next point;

One's thinking behind an MVNO has to change, it is not a mini Mobile Network: It has to be approached carefully, and its business model needs to be audited by all those involved.

And this is where the otherwise spot on article loses the thread: it comes to the opinion that the only MVNO model is "no frill" and that the US MVNOs are missing this entirely. Both of these are wrong in my opinion:

Firstly, "no frills" is not the only MVNO model for Europe; it is just the only one that has managed to master the two points above: thinking differently and keeping costs low. However, there have been casualties, both of which had the "no frills" model that the article preaches, but made both of the grave errors above.

Secondly, "no frills", like many European models, is not a model for the US; just look at the all popular iPhone as an example: In the US, AT&T are selling the iPhone for as little as $59 per month. For that you get the all important iPhone, unlimited data, 5000 off-peak minutes, 200 SMS and 450 inclusive minutes... As the iPhone launches in Europe, and more specifically the UK, I very much doubt it will be had for £25 per month, let alone with unlimited data (although on 2.5G only, "unlimited" is not that much!). Where is this going? In the US, mobile, like most consumer goods, is already "no frills" in price, so MVNOs in the US have to compete on other VAS, like the examples of Healthcare in my now ageing but once best selling Next Gen MVNO report... and for those of you thinking this is a plug, its not, its worse; its a "I told you so" ;-)!.

The real MVNO models are yet to come, and while in Europe they will definitely have to be competitive on price, in both the US and in Europe, and the Rest of the World, customers buy, recommend and repeat purchase on many things above price, and I would suggest even the successful "no frills" MVNOs, when you scratch below the surface, have succeeded on qualities offered to their customers beyond price.

Sunday, 20 January 2013

Future MVNO

The future of MVNOs has been a long time coming, however there is still a long way to go, and the activity of 2012 shows that we are in for a very interesting 2013 MVNO wise, which will reflect well for the Telegeography predictions for 2013

There is still huge untapped opportunities in MVNO

However there are two things that strike me from this:

Mature MVNO market share

Market share in mature markets such as the UK, arguably the most mature as it was the first MVNO market and the two big originators of the MVNO; Virgin Mobile and Tesco Mobile, now have way above the W. European average at 13.7% of the market just to themselves, down from over 14% the previous year.

The above Diagram has been used by EE in their MVNO address for the past few years, and hints at huge potential in the MVNO market, but as an MNO presentation only touches the bigger picture.

MVNO Brand Segmentation

If we dig deeper, as I do when doing the marketing plan and product development for new MVNOs, we see that each segment of the MVNO market to date, even markets that claim to be overcrowded like the Ethnic, Supermarket and Brand MVNO space, are not actually overcrowded at all:

Segmenting even mature, overcrowded MVNO sectors shows there is still a lot of opportunity

For example, the overcrowded Ethnic MVNO market in the UK is not in fact overcrowded at all; the big players' competitive analysis shows that they have saturated certain markets (probably 20 of the 258 countries) and certain demographics, but far from the whole sector. The same rings for the Supermarket MVNO and even the Brand MVNO space, the above date has been randomised and renamed to protect the innocent, but am more than happy to give anybody the template with the date, use the MVNO contactify link to get in touch.

Updated Future MVNOs

So what is left to do in the below? Well the answer is quite a lot:

Music is still in the pre-wholesale strategic sign-up phase, as is content, but you can expect the whole audio, video and other content market (think Red Bull MVNO model) to mature and expand.

Data MVNO has expanded, with Dell and Lenovo doing a Laptop based deal, Kindle in ebooks, Tom Tom for GPS and the whole M2M space

Healthcare has been successful in the US, and has lots of promise globally, with even Telefonica restructuring in 2012 to include a whole m-health vertical, which probably means its still in "the MNO can do it" mode, however this will soon change as MNOs dip their toes into the water via MVNOs

Converged MVNOs are really coming, with Virgin Media adding 1 Million Tivo boxes to its 4 Million mobile customers and presumably even more broadband, expect a wider definition of convergence than we may expect is all I can say...

The Global MVNO is also coming, however as we can see from the top graph, it needs the disparity between the various markets to meet, or at least more markets to reach the 10% MVNO market share for it to kick off.

Original Future MVNOs Article 2008:

Future MVNOs

Future Mobile Virtual network business Models

There are many upcoming MVNOs in the pipeline, however they are very different; they seem to be more mature, building on a core business proposition and mobile as a channel, rather than playing directly in the mobile space with a brand. For me the hottest MVNO prospects are:

Music MVNOs, with wholesale data and even "all you can eat" data tariffs emerging but being slow to take-up, this model could work well. However, it will not be download as much as you like to a "free Nokia N91". It is more likely to take the form of an established music brand enabling either an On Device Portal to browse, find and purchase music, even download a certain amount of lower quality/realtone tracks immediately over 3G, but the general ideal will be to download and save them on a PC or shared network space and upload them to the device by memory card or even USB connection. As an advocate of wireless & mobile I have found it difficult to admit, but the fact is that MP3s over bluetooth, 3G and even Wi-Fi, just don't make for a great user experience, nor aid battery life - the spanner in many mobile cogs!

Data MVNOs, building on mobile broadband, either by reselling or repackaging existing services, such as O2 mobile broadband, which is already resold by many players in the business as a service provider or enhanced service provider by hardware resellers, M2M providers and other solution providers and system integrators; or more complex solutions, which may or may not creep over into other areas above and below, such as hardware MVNOs.

Content MVNO. The content MVNO can work, despite the demise of ESPN, but it will be based on data usage with maybe an On Device Portal or a custom OTA firmware, where the "Vodafone Live" button starts the customer experience, rather that custom handset, and the business model will be around the value of that content, rather than trying to compete on minutes with the network; it has to be a content blackberry in terms of user take-up.

Global MVNO. There has been little talk of this model, and so far we have just seen a few SIM based products, however, there is a huge market for the global traveller from big city banker to individual consultant with passport, will travel, all the way down to interailing youth. There are many VAS that can be added to this model, from student info to VoIP or even just automated calling card applications.

Converged MVNO. People have Skype, Dect phones, mobile phones, work IP phones, work analogue phones, SOHO phones, IM, SMS, uncountable emails, some web, some on exchange, some on their laptop/desktop... there is space for converged MVNOs in every sector, its just a question of who will move first, and watch everyone follow. Or Has Apple already led, and it will take the followers to not be so preoccupied with exclusivity and 40% to realise that convergence, and a X% of their mobile, broadband and roaming is a better deal...

MVNO and the Brand

We have heard a lot about the brand MVNO and MVNO and the brand, unfortunately most of it is confined to the conference room and reports.

Brand MVNO

The Brand MVNO is where it all started; Virgin Mobile UK spent a lot of money on promoting their brand, and they were right - look at how much money Vodafone started spending on its brand post Virgin success vs. before! The problem was, Virgin then went to conferences saying: "don't copy us unless you have £50M to spend on your brand" which the MVNO industry unfortunately generally read as "don't spend anything on your brand". The Brand MVNO Model is covered in this post.

MVNO Brand

The Brand is a critical part of every MVNO, from the pitch to the MNO to sales:

The MNO is putting its faith in the MVNO ability to access a market - without a brand, how long will that last? Brand is one of your strongest MNO negotiation points!

In fact all your MVNO partners will be sizing up the opportunity of your brand when they negotiate with you, as Brand = ability to sell, ability to distribute

The brand will determine your your uptake and limit your churn. Remember, Remember that MVNOs live and die on acquiring customers cheaper (than the MNO can) and keeping customers longer, and the Brand is key to this.

There is a role for the niche within a niche with brand: Brand helps you compete within even an extremely competitive space such as the Ethnic MVNO market

MVNO Brand as part of Marketing strategy

However, be aware of how you use your brand: see matrix below; many MVNO brands today are in the dangerous "follower" space, especially those that do not have a defined MVNO marketing strategy. Some may try to come in at the Leader level, however this has its problems, the key being that it is expensive to maintain: you can find yourself at a monthly / quarterly review renewing media that just is not effective at selling because it is protecting your brand, you may also be even considering subsidies or at least a large amount of arbitrage/utilisation risk on your bundles to get here...

Virgin mobile entered as the challenger, and did not move into the leader position until maybe 2-3 Million customers when it essentially became and MNO brand of its host, began subsidising handsets, etc, etc.

MVNO Brand Values

Becoming a challenger is not hard: if at first you have defined your product and segmented your market, the brand and its values should not be hard, but check, do those value ring through? An overwhelming feedback in the latest MVNO conference in Paris, from Red Bull, NRJ, Bleip and more leading brand strategy MVNOs commented on one thing: NO SMALL PRINT. If your brand is simplicity, honesty, etc, small print goes against this. Most MVNOs win over the MNO on simplicity, if you look at the MVNO segmentation post. Does your MVNO product reflect your MVNO brand, is what you are doing new, or just rehashing what the MNO does???

Work these simple points out, and not only will your negotiations with your MNO and other partners be simpler, but your MVNO will benefit is acquisition and retention - in this sense, every MVNO is a brand MVNO!

Original MVNO and the Brand support page:

BRAND IDENTITY IN MOBILE SERVICES

For a brand to have any value it must mean something to the customer and to do so it needs to be exclusive. This is not compatible with trying to own all areas, sectors and parts of the market with just one brand, as most mobile operators do today. Because of this, most mobile operators' brands are all over this matrix. Note that successful MVNOs, like Virgin Mobile, started as a challenger and are now becoming brand leaders, whilst minimising any association with the "follower" values.

Wednesday, 14 March 2012

A very interesting MVNO launch recently has been the launch of Samuel Eto'o Fils is to launch his own MVNO in his home country Cameroon.

before going into detail, I want to get across that is is important in many ways:

It is in Africa, a continent that has been a world leader in many mobile developments, most so in mobile payments where there are multiple players in multiple regions, and as such the MVNO could server as an important enabler of new mobile technologies where the MNO can sometimes be slow, as well as the regulatory reform that most African countries are on the cusp or or in the midst of

It is football, the football MVNO has been very slow to market for various reasons, too many to list here from the last 10 years, but the time is right for the football MVNO, as well as other affiliate MVNO schemes, however, what is important is that the right club, or in this case the right player initiates and sets the tone for others to follow, which brings me to

It is the right player, in the right market; an older, respected player who is seen as a positive role model and has done lot's of well intended charity work, not just the token celebrity PR charity work, not just in Cameroon but further afield, whose "brand equity" will export to other countries, but has not chosen a crowded or too high profile market in which to launch

So far so good. Like with any MVNO, there are still pitfalls and the above are by no means a guaranteed recipe for success, however we start well, which is important.

African MVNO opportunity

The African market has been crying out for more MVNO activity for a while. It is a very interesting market where I have done quite a bit of work, from rolling out pan-African pre-pay TV, VAS aggregator and social networking products as well as other projects around pan African mobile payments: in short:

The market wants regulatory reform, is mostly there, it needs a vehicle to push it, VAS aggregation or app stores may push it, buy MVNOs would be better for everybody - from mobile number portability to single short-codes and numbers in every country to real pan African aggregators

The market wants more innovation, mobile payments got Africa off to a flying start, but a lack of dynamic vehicles is slowing it down. Once MNOs have got over the shock of MVNOs (usually about the time they see the amount of almost 100% EBITDA positive revenue they generate) they are also a fantastic platform for innovation that does not entrench the market where each operator mimics the other no matter what (GPRS, SMS, PTC, etc). That is, an MVNO in the states could have launched push to talk and would not have caused a de facto push of all MNOs to PTC, as it did with Nextel launching PTC: all that money later, where is PTC now???

Personal MVNO opportunity

The personal MVNO had to happen, it is a subset of the Brand MVNO opportunity and could work very, very well as

Consumers tend to grow stronger and more loyal followings than brands, and they do not tend to go out of fashion as soon as other brands do.

They also lend themselves to a wider Value Added Services (VAS) opportunity, where the football club or other brand tend to use the MVNO as a brand extension for their core product, a person can easily endorse a wider range of products without diluting the proposition and as such keep the product fresher, more relevant, for longer. With Football based VAS we have rolled out for various MNOs and MVNOS we have seen subscriptions to footballers' feeds be much, much more loyal than those of clubs or leagues

Personalities tend to cross borders better than clubs, which at the end of the day are more "national". there is therefore more opportunity to export both the model and the brand itself.

people tend not to have a conflict: where a club may be sponsored or have links with an operator, a personal brand is seen as a "free agent".

However, having said this, the brand is important - it should be an inclusive brand. Eto'o does not spark a controversy or an objection; controversy may sell initially, but it does not expand well, nor attract the golden feature of any MVNO: loyalty. you also do not want a brand that even the most loyal fan may feel ashamed of or want to keep quiet at any moment. That is, with a club phone, you do not want it to ring when you are in a bar watching a game with a bunch of supporters from another team, or when you have beaten someone away... a player does not have that "exclusion".

So what will be key to personal MVNO success:

Value added services, starting with the obvious (which should be for free) but moving beyond that

Getting the right deals and partners: the MNO, MVNE and other contracts should not have the usual clauses that make it difficult for the MVNO to be traded, sold or floated or even ported, should it become too big or too different to what was expected and no longer fit either parties strategic needs. This is the case for any MVNO, but more so with ones like this which are firsts, and the unknowns are huge: this could easily attract 1 million or more of the Cameroon population, or could only have 50,000 subs after 3 years, even then, the spend, type of usage, handset preference and many more unknowns mean that any/all of the parties may outgrow or be outgrown by the product.

keeping it simple and scalable: no personalised handsets, no VAS that cannot be scaled or retracted or need silly numbers to get ROI... the business model needs to work on many levels and adapt to the unkowns

If it does this we may well have out next MVNO model darling, and it will be all about the brand again... bless :)

I shall be adding more in the coming months and pasting updates vai the Virtuser Google+ and Virtuser Facebook pages, so please like us on Facebook and +1 us if you have found this article interesting, useful or helpful.